Hinkley gets one answer but more questions

29 July 2016

Hinkley Point C finally received a positive final investment decision from the EDF board last night, only for the UK government to postpone signing its supporting agreements. Prime Minister Theresa May's new cabinet wants to review the deal and decide in early autumn whether to commit its support.

Ten years after nuclear power was put 'back on the agenda' by former prime minister Tony Blair the first new nuclear power project is ready for the final decision to go ahead. Hinkley Point C would feature two Areva-designed EPRs at 1650 MWe each, expected to operate for 60 years and to benefit from ratepayer-backed guaranteed price for electricity for the first 35 years. However, the project is controversial due to the published capital cost of £18 billion ($23.6 billion) which must be laid out before the plant receives the fixed price for electricity generated of £92.50 per MWh, well above the current market price. More than £2 billion has already been spent on site preparation.

British industry and government leaders were preparing to assemble at the Hinkley site as the EDF board announced its decision at 7pm last night. The plan was for a ceremony the following morning at which the government and EDF would formally sign documents to confirm the Contract for Difference (CfD) support. All this was suddenly scrapped after business and energy secretary Greg Clark wrote in an email, "The UK needs a reliable and secure energy supply and the government believes that nuclear energy is an important part of the mix. The government will now consider carefully all the component parts of this project and make its decision in the early autumn."

New UK prime minister Theresa May recently met with French President Francois Hollande. Hinkley Point C is both strategic and controversial in both countries (Tom Evans - Crown Copyright)

Clark and May haved seized control of the project's future by placing what appears to be the final decision with the government at a time when Britain begins to discuss its future relationship with the European Union - and nuclear partner France - after a referendum set the country on course to leave the bloc. The other partner in the project is China General Nuclear, which would take a 33.5% equity stake. It reportedly commented that it understands the new government's desire to consider the deal.

The timetable of an 'early autumn' decision whether to agree to CfD closely matches a previously rumoured decision time of September.

GMB union's national secretary for energy, Justin Bowden, called the government's move "bonkers". "After years of procrastination," he said, "what is required is decisive action not dithering and more delay. This unnecessary hesitation is putting finance for the project in doubt and 25,000 new jobs at risk immediately after Brexit."

Tom Greatrex, the chief executive of the UK Nuclear Industry Association said, "I am now urging new ministers to quickly endorse the decision to show they are serious about industrial strategy, building new infrastructure by securing inward investment to create our low carbon energy supplies of the future. The most important thing is that the board of EDF and its investors have the finance in place to enable them to give the go ahead for the project and that is very good news. We have a strong UK supply chain which has built up its capability and has trained people so they are able to build and operate Hinkley Point C."